Petrol could rise to €1.20 per litre as oil hits new high

AS oil prices hit new highs yesterday, petrol prices were set to revert to the record levels reached last August when the average price of unleaded rose to 108.5 cents per litre.

Goodbody Stockbrokers have predicted prices could rise to €1.20 a litre as increasing global nervousness yet again spooks markets.

Prices are under pressure this time due to growing fears of a US military strike on Iran because of its continued investment in nuclear weapons Iran is the fourth biggest world producer of oil.

Oil prices yesterday hit highs of $70.88 a barrel in New York.

Bloxham Stockbrokers chief economist Alan McQuaid warned yesterday that rising oil prices would lead to price increases across the board due to the impact of oil prices on the cost of consumer fuels.

This year, gas prices rose 25% and electricity charges went up 3.1% for consumers.

If oil prices continue to rise, this pressure will continue into the future, he said.

In the event of a US invasion on Iran, its oil output, which constitutes four million barrels per day, could be totally disrupted and that could push the price of oil out to $131 per barrel, experts have warned.

More immediately, the fear in the US is that the price of a gallon of petrol could go from $3 to $4 in the coming months, if the scarcity issue continues to dog the market.

Translated, that means the cost of petrol here could rise to €1.20 per litre.

Leading economist Eunan King of NCB Stockbrokers, who have forecast massive growth for the Irish economy, said yesterday that high oil prices were here to stay. Scarcity of supply "suggests prices will continue to stay high indefinitely", Mr King said.

In the past three years, the price of oil has shot up from $20 per barrel to over $70, but the impact on most developed economies has been relatively modest.

However, British Airways yesterday increased its fuel charge to £35 (€50) per ticket for long-haul flights, a move which Ryanair condemned as outrageous.

Ryanair said even if oil goes to $100 per barrel, it will not introduce fuel surcharges.

Since the first indication by US President George W Bush a strike on Iran could not be ruled out, the markets have continued to fret about the impact of such a move on global oil stocks, already balancing on a knife edge since Hurricane Katrina stuck New Orleans.